With permission, Mr Speaker, I would like to make a statement on Libya and report back from last week’s European Council. On Libya, I want to update the House on military action, on the steps that we are taking to strengthen and deepen the alliance, on our efforts to ensure that humanitarian aid gets through and on plans for the future, including the conference that we are holding tomorrow.

First, on military action, I believe that it is quite clear that allied operations have had a significant and beneficial effect. We have stopped the assault on Benghazi and helped to create conditions in which a number of towns have been liberated from Gaddafi’s onslaught. In towns such as Ajdabiya, Ras Lanuf and Bin Jawad, people are now free to return to their homes. The no-fly zone is now fully operational and effective. When it has been challenged, Gaddafi’s planes have been shot down. He can no longer terrorise the Libyan people from the air.

UK pilots have now made more than 120 sorties and flown for more than 250 hours. Over the weekend, RAF Tornados continued to conduct armed reconnaissance sorties, hitting a total of 22 tanks, armoured vehicles and artillery pieces around Ajdabiya and Misrata. This involved some extremely skilful and courageous work by British pilots seeking out and destroying tanks while doing everything possible to avoid civilian casualties. I am sure that everyone here will want to send their best thoughts and wishes to our brave pilots and all those in our armed services for the work they do.

I can also tell the House that during the early hours of this morning our Tornado pilots flew deep into the desert to strike against major ammunition bunkers at Sabha, which we believe were being used to resupply Gaddafi’s forces, including those terrorising people in Misrata. Initial reports suggest that the bunkers have been destroyed.

There remain, of course, real issues of concern. The situation of civilians in Misrata and Zintan is extremely grave, and the situation for civilians in other towns under the regime’s control is also deeply concerning, with widespread reports of human rights abuses. But we have moved quickly and decisively over the last week and we will stick to our task, as set out in the UN resolution and take all necessary measures to protect civilian life.

Secondly, on the strengthening and deepening of the alliance, I told the House last week that we believed NATO should take on the command and control of Libyan operations. This has now been agreed. NATO is already co-ordinating the arms embargo, the maritime operation and the no-fly zone. Now it will take on command and control of all military operations, including those to protect the civilian population. Canadian Lieutenant-General Charles Bouchard has been appointed as the NATO commander of the joint taskforce for the operation.

I have also made clear the crucial importance of the further active involvement of Arab nations. On Friday, the United Arab Emirates confirmed it would provide 12 fast jets, six F-16s and six Mirages, while on Saturday jets from the Qatari royal air force flew over Libyan

airspace to patrol the no-fly zone for the first time. We look forward to welcoming the representatives of five Arab states, the Arab League and the African Union at our conference tomorrow.

Thirdly, it is critically important that humanitarian aid gets through to those who need it. It is absolutely clear that when the Gaddafi regime occupies a town such as Ajdabiya, the people suffer terribly. When the regime leaves a town, the way is open for proper humanitarian access. The important thing now is to make sure that it happens.

Our strategy is to help fund the humanitarian organisations that have been able to get in, to help the UN play its co-ordinating role and to provide assistance at Libya’s borders. We have funded the International Committee of the Red Cross, which is now present in Misrata, to provide support for up to 100,000 people for basic necessities and to treat 3,000 walking wounded. We flew 12,000 migrant workers trapped on the Tunisian border back to their countries and their families and we delivered 2,000 large tents and 38,000 blankets to the border. We will continue to give intense focus to humanitarian access in the coming days.

Fourthly, on plans for the future, in order to make the pressure on the Gaddafi regime as effective as possible, it is vital that we have the maximum political and diplomatic unity around the world. At the European Council, Europe came together over Libya. The Council conclusions endorsed UN Security Council resolution 1973, set out Europe’s

“determination to contribute to its implementation”

and recognised the lives saved by our action so far. This is an important step forward and it shows that Europe is now fully on board with this mission.

Today, alongside the British and French aircraft, there are Danish, Dutch and Spanish aircraft taking part in the action over Libya, flying from Italian bases, working with warships from the UK, France, Italy, Belgium, Netherlands and Poland. Romania will also provide a frigate and the Turks are planning to make naval assets available, too. Tomorrow, Britain will host a broad international conference in London to review progress and plan for the future. This will include representatives from more than 40 countries, including all the military contributors to the operation, and the United Nations Secretary-General will also be there.

I can tell the House this afternoon that France and the UK will issue a joint statement to the conference participants, setting out what is at stake as we gather to support a new beginning for Libya. A copy of the statement is in the Library.

Libya’s new beginning requires three things: first, to reaffirm our commitment to UN Security Council resolution 1973 and the broad alliance determined to implement it; secondly, to ensure the delivery of humanitarian aid, including to the newly liberated towns; and, thirdly, to help plan for the future of Libya after the conflict is over. It is for the people of Libya to choose how they are governed and who governs them, but they have a far better chance of doing that as we stand today than they did 10 days ago. Had we not acted, their future would already have been decided for them.

Let me now turn to the economic issues discussed at the Council. Britain had two goals at the summit: first,

to support the euro area’s efforts to bring stability to the eurozone while fully protecting Britain’s sovereignty, and, secondly, following our Budget for growth last week, to win support for a similarly ambitious pro-growth, pro-market agenda for Europe as a whole. Let me take those two goals in turn.

I have always said that a successful eurozone is in Britain’s national interest. Given that 40% of our trade is with eurozone countries, we want the eurozone to deal with its problems and challenges, and we should therefore welcome the steps to which eurozone countries are committing themselves to taking with the euro plus pact. However, I have also said that Britain is not in the euro and will not be joining the euro, so it is right that we should not be involved in the euro area’s internal arrangements. That is why we are not intending to join the “pact” that euro area countries have agreed. It is also why I believe that we should not have any liability for bailing out the eurozone, but given the current emergency arrangements, established under article 122, we do have such a liability.

That decision was taken by the previous Government, and it is a decision to which my right hon. Friend the Chancellor specifically objected when it was taken by his predecessor after the election but before this Government took office. Frustratingly, we are stuck with it for the duration of the emergency mechanism, but that is why I ensured last December that the eurozone treaty change would carve Britain out of the eurozone bailout arrangements when the new permanent arrangements were introduced in 2013, and specifically secured agreement that, from that point onwards, article 122 would not be used for this purpose. That ends our current potential liability, and makes it clear that from 2013 Britain will not be dragged into bailing out the eurozone.

My second goal was growth. There was clear agreement at the Council about the link between action on deficits and action for growth. As the conclusions clearly state, fiscal consolidation

“should be frontloaded in Member States facing very large structural deficits or very high or rapidly increasing levels of public debt.”

We agree. It is worth noting that the UK still has one of the highest budget deficits in the EU—higher than those of Greece, Spain and Portugal—but because of the actions we have taken our interest rates are closer to those of Germany. It is also worth noting that the EU forecast is for the UK to grow in 2011 faster than France, Spain, Italy, the eurozone average and the EU average.

Just as we have a Budget for growth in the British economy, we need a plan for growth in the European economy. In advance of the Council, I organised a letter, which was signed by nine countries, making the case for specific actions to support growth: completing the single market and extending it to services, boosting trade, opening up and connecting European and global markets, reducing regulation, supporting innovation, and unleashing enterprise. That has had a real impact, not least because the argument is now being made not just by Britain but by Sweden, Denmark, the Netherlands, Finland, Poland, Latvia, Lithuania, and Estonia. As a result, the European Council endorsed much of our

approach. We agreed that we should focus on concluding the Doha round and other free trade agreements in 2011. We also agreed that

“the overall regulatory burden should be reduced”,

and that micro-enterprises should be exempted from certain future regulations. That moratorium, which mirrors the moratorium on regulation for small businesses in last week’s Budget, is a positive endorsement of the approach we are taking in Britain.

Finally, the Council discussed how Europe could help Japan to recover from the devastation caused by the earthquake and the tsunami. I spoke to the Japanese Prime Minister on Friday. As the House knows, we have provided search and rescue teams, and stand ready to help in other ways. I know that everyone in the House will applaud the resilience and courage of the Japanese people during these tragic times. Looking to the future, we should show solidarity with the Japanese, and help both our economies by pushing forward with a free trade deal between Japan and the EU. At Britain’s instigation, the Council conclusions explicitly refer to the

“potential launch of negotiations for a free trade agreement .”

At this Council, Europe was faced with a choice: to rise to the challenges facing our continent, or to take the path of least resistance. On Libya, Europe chose to come together around the stand taken by Britain, France and the United States to respond to the call of the Arab League and save people on our continent’s doorstep from slaughter. On the economy, Europe chose a new direction, based on the principles set out by Britain and other member states, for stronger growth and prosperity.

For too long Europe has focused on issues of process and structure. Last week, Britain helped Europe to focus on policies and people: on creating prosperity for its citizens, and confronting a humanitarian crisis on its southern border.

I want to concentrate my questions on Libya, but let me first deal with the issues of economic policy and Japan. On economic policy, I welcome the Europe 2020 conclusions, the proposals on economic governance and the commitment—which I do not think the Prime Minister mentioned—to explore an international financial transactions tax. On the international financial transactions tax, may I ask the Prime Minister for clarity on the UK’s position and urge him to take forward discussions actively both with the United States and at the G20? On the 2020 strategy, we saw some welcome progress, as the Prime Minister said. The European Council also talked about the priority of “reducing unemployment”, which the Prime Minister did not mention in his report to the House. I wonder whether he shared recent UK experience with his colleagues and told them that the forecasts for UK unemployment have been revised up for each and every one of the next five years by up to 200,000—something the Chancellor failed to mention in his Budget speech. May I also ask whether the Prime Minister told the Council that he had recently unveiled a Budget for growth that downgraded growth this year, next year and the year after? Did he warn Council colleagues about the dangers of going too far and too fast?

On Japan, I share the sentiments the Prime Minister expressed about all possible help for reconstruction being given to the Government and people of Japan. The immediate priority for the UK Government will rightly be the situation of our citizens, but, looking to the future, will the Prime Minister update the House on the timetable for the report he has commissioned by Mike Weightman on any lessons that might need to be learned for British nuclear plants? It is important that this report is completed quickly, because we do not want to delay without reason the important progress we need to make on new nuclear power in our country.

Turning to Libya, may I start by welcoming the strong and unanimous position adopted by the European Council? I welcome the fact that the military operation to enforce the no-fly zone and protect civilians is showing signs of success. Now that the rebels are advancing, will the Prime Minister assure us that efforts are being made to remind them of their own humanitarian obligations to respect human rights and protect civilians at all times? Lord Ashdown raised a number of concerns this morning, and, for the record, may I ask the Prime Minister to repeat his reassurance of last week that the UN resolution is aimed at the protection of the Libyan people, not choosing the Libyan Government?

On the question of command and control arrangements for the military operation, I welcome the decision to move to the NATO command structure. Will the Prime Minister say a bit more about the governance arrangements that will now be in place for that, and in particular what the relationship will be between the North Atlantic Council and the narrower group, which I believe the French are convening, of those directly involved in military action? Given the importance of maintaining Arab support, I welcome the meeting being hosted tomorrow by the Foreign Secretary with a broad alliance of countries. What continuing role will this wider group play, and how often will it meet?

May I also emphasise to the Prime Minister another point: the importance of post-conflict planning? Whatever the eventual outcome in Libya, the peace is set to be as challenging as the conflict. Will he clarify where he believes responsibility for post-conflict planning lies? In particular, which institution, UN or otherwise, is in his view best placed to oversee this work, and does he see the case for a particular individual being asked to lead the international community’s efforts?

I think we both agree that the international community should continue with a strategy that includes non-military means. I therefore welcome the intention of the European Council to strengthen sanctions against the Gaddafi regime. The Council’s conclusions say that EU member states will be proposing the adoption of further sanctions measures at the UN Security Council. Will the Prime Minister say more about the scope and timing of those proposals? Finally on Libya, given that we have a long recess coming up, may I urge the Prime Minister to keep open the possibility of the House being recalled, should events require it?

Turning to events in the wider region, may I also welcome the words in the European Council conclusions about Syria, Yemen and Bahrain? It remains essential that we avoid the reality, or the impression, of double standards. May I therefore ask the Prime Minister what specific actions the Government are taking to attempt to prevent further repression in these countries?

Finally, may I once again pay tribute to the efforts of our armed forces? They are doing extraordinary work, protecting the people of Libya and enforcing the will of the United Nations. We owe them huge gratitude.

I will take the right hon. Gentleman’s comments in reverse order. First, I thank him for what he says about our armed forces. He is right to say that they have, as ever, performed with great courage, professionalism and dedication; they are extraordinarily capable and brave people and this country is lucky to have them. He asked about other countries and whether we are sending a clear message. I believe our message should be clear: the way to meet the aspirations of people in north Africa and in the Arab world is with reform and dialogue, not with repression. We have made that clear throughout and it is important.

The right hon. Gentleman asked that we keep the House up to date and I certainly intend to do that. I can let him know, because I have checked this, that in my first 10 months as Prime Minister I have made 15 statements in this House. I am told that that is more than John Major, Tony Blair, Gordon Brown or indeed Margaret Thatcher made, so I think I am doing my bit to keep the House informed.

Thank you very much. I will certainly look at what arrangements need to be put in place for information to be regularly published and discussed in this House, because I am keen that that should happen.

The right hon. Gentleman asked about post-conflict planning and which body is in the lead. As I said in my statement, we want to make sure that the UN feels firmly in the driving seat; Baroness Amos does an excellent job and the UN should be gripping this emerging picture and working with those agencies that have managed to get through to places such as Misrata and Ajdabiya, and elsewhere. He asked about the wider group that will meet as well as NATO members. We are going to be forming a sort of contact group of friends of Libya for the future, but all the operations are now going to be run with command and control and co-ordination provided through the NATO machinery.

The right hon. Gentleman asked whether the emphasis is still on protecting people, not regime change. That is right—the UN Security Council resolution is all about putting in place the no-fly zone; protecting civilians, using all necessary measures; and, of course, humanitarian aid. He asked for assurances that we will make it clear to the rebels how they should behave in terms of civilian life. We are now in proper contact with the rebels; a Foreign Office official is having discussions with them. That is vital as we need to get to know and work with them, and make these points to them.

The right hon. Gentleman rightly refers to the fact that there was a discussion on nuclear energy at the European Council. We agreed to stress test all EU nuclear facilities, making sure that that is done by the appropriate bodies, carried out by independent regulators, properly peer-reviewed and tested. Europe must learn all the lessons from the Fukushima nuclear plant. I cannot give a timetable for the report we will be carrying out through the chief nuclear inspector, Dr Mike Weightman, but it will be done as fast as possible.

I now turn to Europe and the financial transactions tax, which was mentioned in the Council’s conclusions. We are very happy to look at this, but we believe it has to be done on a global basis. There is a great danger of a group of countries deciding to do this and just seeing financial transactions go completely out of their area, so it must be done on a global basis.

Finally, on Europe, the right hon. Gentleman made some points about unemployment. We did discuss unemployment. In Britain, as he knows, we have seen the claimant count come down and we have seen 300,000 more people in work. I would just make a point about the message coming clearly from Europe. Commission President Barroso has said:

“Without fiscal consolidation, there is no confidence, without confidence there are no investments, without investments there is no growth.”

On the economic aspect of the Prime Minister’s statement, does he agree that the recent election in Germany shows that the German people have lost patience with the European Union, as have the British electorate?

I am not an expert in the politics of Baden Württemberg, but I suspect that this is partly about the euro and the effects of the euro. I think that there are also strong feelings about nuclear power in Germany. The point I would make is that whatever our views about the euro—I think that my hon. Friend and I agree that we should stay out of it—it is in Britain’s interests that the eurozone sorts itself out, because that is the destination for a lot of our exports. So we should support these countries in what they want to do to deal with their problems and challenges.

Does the Prime Minister accept that when he referred to the discussions that took place last May on the eurozone fund he gave a somewhat incomplete account of my conversation with the now Chancellor? We did indeed agree that we should do everything we could to keep Britain out of the main part of the rescue fund, but in relation to the smaller element to which the Prime Minister refers, what we discussed was not voting against, but abstention, recognising that Britain could have been outvoted—that is exactly the same thing that the Chancellor of the Exchequer referred to when dealing with Ireland. So when the Prime Minister next refers to this issue, perhaps he would give the whole account, not a partial account, of what happened.

Fortunately, I have had a full discussion with the Chancellor about that issue and he was absolutely clear that it was something to which Britain should not agree; nor should we. The problem is that we are stuck with this mechanism, which I have

managed to get rid of once the new mechanism is introduced. That is the sort of action, frankly, that we have needed in Europe these past few years.

When considering any of the variety of proposals that may be on the table at tomorrow’s meeting, will the Prime Minister do all in his power to prevent the endorsement of any proposals that would enable Colonel Gaddafi to regenerate the apparatus of terror and oppression that has sustained him for too long?

I thank the right hon. and learned Gentleman for that question. This is a very important point. All sorts of people will quite rightly want to ensure that there will be a proper political process at some stage so that Libya can transition to democracy. It is important, however, that while such clear and flagrant breaches of the UN Security Council resolution are going on, we should do everything we can to protect people and, as a result, the Gaddafi regime will effectively be driven back.

May I strongly associate myself with the Prime Minister’s words about the successes of the past week in justifying the UN Security Council resolution on Libya? The rebels’ progress more than reflects the widespread view across the House about the importance of the resolution. However, the Prime Minister did not say much about the European Union’s relations with the rest of the Arab world in future. One reason to support the resolution was the danger for the rest of the Arab world of Gaddafi’s potential slaughter. Will the Prime Minister say something about the potential for conditionality in EU engagement with the countries of the middle east and north Africa on trade, development and other matters as we go forward in support of democratic governance in north Africa?

The right hon. Gentleman makes an important point, which is that Europe’s engagement with north Africa and the middle east has not always been very successful in the past, particularly on the grounds that he describes. There has not been enough conditionality on the progress those countries need to make towards more open societies and the building blocks of democracy, getting rid of emergency laws and the rest of it. The European Council conclusions, like those from our emergency summit, talk about putting in place a new partnership and making a new offer to these countries with deeper economic integration, broader market access and greater co-operation and, in return for that, we should ask for more conditionality in the progress that they make. Money is not the problem; there has been plenty of money put into these areas by Europe. We need more of a focus on what we believe we should be getting out of it.

Will the Prime Minister use tomorrow’s summit to clarify the rules of engagement? He will be aware of the criticism of the attacks on the arms dumps as they have been considered to involve a fairly broad interpretation of the UN resolution. Does he agree that it is critical that the future of Libya is not cluttered up with acrimony among the political consensus that he has successfully built up?

My hon. Friend makes a good point, but I would disagree with anyone who says that destroying a Gaddafi arms dump is not in the terms of the resolution, and for the following reason. We can see very clearly what Gaddafi’s regime is doing in Misrata, in Zintan and in other places. He is using munitions to kill people—to murder his own citizens—so depriving him of weapons is not only in the letter of the resolution but in its spirit, too.

Further to the question asked by the former Chancellor, my right hon. Friend Mr Darling, I am sure that there will have been an official note of the conversations between the former Chancellor and the present Chancellor. Will the Prime Minister publish that note so that we can decide for ourselves whether he or the former Chancellor is providing the more accurate report?

The Prime Minister rightly points out that the Budget last week went into some detail about the support that we were going to give to small and start-up businesses. Will he go into a little more detail about the work he did this weekend in the European Council on micro-businesses, which will clearly be important organisms for growth in employment in the years ahead, both in Europe and throughout the world?

My hon. Friend makes an important point. Businesses that are either starting up now or are yet to start up will provide a lot of the growth in jobs, investment and opportunity here and elsewhere in Europe. What was encouraging about this European Council was that the Commission itself, in response to the letter that we had produced with other countries, brought up its own proposals, one of which was a moratorium on certain regulations for all new businesses for a specific period. That does not go quite as far as what we have done in the UK, but to hear the Commission talk about deregulation, cutting the burden of regulation and taking regulations off new small businesses was, I thought, very good progress.

I welcome the references in today’s statement to the access to humanitarian help. Now that the rebels are advancing well, is it not time for coalition countries, particularly this country, to give us some idea when the Government will consider that the job is done? Also, will the Prime Minister please confirm that all possible diplomatic avenues are still open?

First, in terms of diplomatic avenues, it is welcome that there is now British diplomatic representation talking with the opposition in Benghazi—I think that is hugely welcome. In terms of when the job will be done, I think the answer is when the UN Security Council resolution has been secured. Let me take the right hon. Gentleman back to what the President of the United States said:

“Qaddafi must stop his troops from advancing on Benghazi, pull them back from Ajdabiya, Misrata and Zawiya, and establish

water, electricity and gas supplies to all areas. Humanitarian assistance must be allowed to reach the people of Libya. Let me be clear, these terms are not negotiable”.

Of course, Gaddafi has been driven back from Benghazi and out of Ajdabiya, but he is still terrorising and killing people in Misrata and terrorising other towns, he has not allowed humanitarian access and he is in flagrant breach of the Security Council resolution. I think now is the time to press ahead—helping those civilians, making sure those lives are saved and giving the Libyan people the chance of a different future.

The Prime Minister has suggested that we are liable for the bail-out mechanism entirely thanks to the former Chancellor. In that case, will he be happy for the current Chancellor to respond to my freedom of information request and publish the advice that he received on this matter on assuming office to demonstrate that we are not liable for the bail-out billions because of any failure to grasp the small print in those first few halcyon days in office?

I can go into even more detail if my hon. Friend wants: article 122 was turned into qualified majority voting via the Nice treaty. My right hon. and learned Friend, Michael Howard, who is now in another place, said, as a Back Bencher, “You are making a terrible mistake here: this could be used for future bail-outs,” and the then EuropeMinister, Mr Hain, said in reply:

Is it the policy of the British Government to try to bring about a genuine ceasefire in Libya as apparently urged by Turkey? Is there not a danger that the manner in which allied operations are taking place means that we are getting near to regime change, which is certainly outside the United Nations Security Council resolution?

Of course, everyone would welcome a genuine ceasefire, but let us be frank—two ceasefires have been announced by Colonel Gaddafi, both of which were broken instantly by him, so I think we should have a heavy degree of scepticism about what this man says. I would not be at all surprised if, in advance of the conference tomorrow, he announced some all-encompassing ceasefire tonight, but we have to judge him by his actions and not his words. That is absolutely vital. I defend what the coalition is doing in terms of some quite robust ground attacks to protect civilian life. Frankly, if those things had not taken place—if we had not destroyed tanks and armoured personnel carriers—we would still see people under the lash of the Gaddafi regime in Ajdabiya and in many other towns along the Libyan coast. What we have done has really helped to implement part of the resolution, but there is still more implementation to be done.

My right hon. Friend makes a good point. Not only is Turkey coming to the conference tomorrow, but the Turkish Prime Minister, Prime Minister Erdogan, is coming here on Thursday for talks at No. 10. I have also visited Turkey to see him. It was one of the first visits that I made as Prime Minister. The Turks are incredibly important members of NATO, and I believe that they should also be members of the European Union. They should be intricately involved with the operations that are being undertaken in Libya. They may well also have role as a trusted interlocutor, but right now, what they want to do is get their ships involved and get humanitarian assistance involved as well. That is hugely welcome.

I welcome the grip that the Prime Minister has on the situation, after a slightly unhappy start. When I close my eyes, I hear his predecessor but one, 10 years ago, talking about Kosovo and Sierra Leone in similar terms. On Europe, I welcome his metamorphosis into a pragmatic, fairly friendly European. Will he confirm that we will, if called upon, help our oldest ally, Portugal? When Mrs Thatcher brought the rebate back in 1984, agreed to a tripling of the EU budget, and when Labour Eurosceptics questioned her, she said, “We must help our old friend, Portugal.” Is the Prime Minister still a Thatcherite?

I am a great admirer and supporter of what Margaret Thatcher did for our country, and I am a great admirer of Portugal. When I talked to the Portuguese in advance of the UN Security Council resolution, they were strong supporters of that resolution and said that one of their reasons was that they wanted to be with their oldest ally. So they see the relationship in that way. On financial issues, we should not speculate about any other country’s financial situation or finances. As to what the right hon. Gentleman says about Europe, I have always believed that we should get stuck in in Europe to fight for the British interest, and that is what I do.

My right hon. Friend has rightly highlighted the plight of civilians in Misrata. That concern is shared by the Libyan British Relations Council. Will my right hon. Friend ask his right hon. Friends the Foreign Secretary and the Defence Secretary to look at ways of getting humanitarian aid into Misrata by sea?

We are doing just that. There are a number of humanitarian agencies that are trying to get aid into the ports along the Libyan coast. As I said in my statement, we should be trying to give financial assistance to those that are successful, while helping to get the UN to co-ordinate. Obviously, Misrata is a very difficult picture. Fighting has been going on as I have been standing here. It is difficult to get access, but we should do everything we can to help it.

We believe that the Libyan people should be able to choose their own future. I do not believe that the only alternative to Colonel Gaddafi is some sort of tribal internecine warfare. Many people coming forward in Libya want to see a proper transition. Of course we need to know more about the interim transitional national council, but it is at least a good sign that its members want to be interim, transitional and national, rather than sectarian or tribal. We should be a little more optimistic than the hon. Gentleman sounds in his question.

May I congratulate the Prime Minister on the initiative of the letter that he signed with nine other countries in the European Union, in particular about the importance of pushing forward with a programme of deregulation in the EU? Does the Prime Minister agree that it is essential that someone takes ownership of this programme, and will he do it?

I certainly will attempt to do that, but as my hon. Friend knows, one of the issues is that the only organisation that has the right of initiative in the European Union is the Commission, so the key is to work with the Commission and to persuade the Commission that what is needed right now in Europe is deregulation, market reforms and completing the single market. I think President Barroso sees the world like that. There is no fiscal stimulus left to European countries; they have all run out of money. There is not much monetary stimulus left, with interest rates as low as they are. What we need is the stimulus that comes from making it easier to do business, and I think President Barroso gets that.

The Prime Minister referred to the need for maximum political and diplomatic unity. In that context, will he clarify the position as regards attendance at the conference tomorrow? Will all the members of the UN Security Council be there? What is the position of the British Government with regard to the remarks being made from Russia?

More than 40 Foreign Ministers will be attending tomorrow’s meeting, and it is a meeting of Foreign Ministers, rather than Government Heads and Prime Ministers. In terms of who is coming, it is those countries that are active in the coalition, so there will be strong European representation, but we have also secured, as I said in my statement, strong Arab representation. Countries such as Iraq, Morocco, the United Arab Emirates and Qatar will be there and the Arab League will be represented. I have also heard that the African Union Secretary-General will be there, which is hugely to be welcomed. Not every permanent member of the Security Council will be represented, but crucially Ban Ki-moon will be there, so I think that it is a good opportunity to bring the alliance together to show its strength and depth and to work out the next moves forward, both militarily and politically and diplomatically. It is about showing that the world is still united around UN Security Council resolution 1973 and that there is a group of countries that are determined to implement it in the interests of the world.

I strongly welcome the London summit, particularly the inclusion of Turkey, which is very important, but on the day that the Ashdown

report has emphasised the importance of anticipation in humanitarian response, can I ask that, even though the outcome is still very uncertain, both the summit and the European Union discuss not only the current situation in Libya, but the future humanitarian response, reconstruction and recovery scenarios?

I thank the hon. Gentleman for his question, and indeed Lord Ashdown for his very good and timely report. One of the things that we have been looking at for some time is how to get reconstruction and humanitarian aid into countries faster, which is why we have been looking at trying to have a combined military and development approach in some circumstances. In terms of who does the co-ordination, it seems to me that we should be trying to persuade the UN to take a leading role in co-ordinating, but there are some agencies, such as the International Red Cross and Médecins Sans Frontières, that are already getting into the ports, and we should be helping those that have got there.

I noted what the Prime Minister said about completing the single market and including services. For the benefit of the House, will he clarify whether it is his understanding that, following his NHS legislation, NHS services would become subject to single market competition rules in Europe?

I think that the hon. Lady will find that it was in 2004 that the previous Government extended EU competition legislation to cover all aspects in the UK, and that has now been progressively extended to health as well. That is my understanding, but if I have got it wrong in any way, I will certainly write to her.

I will certainly look into the case my hon. Friend mentions. I have received similar representations from companies in my constituency that are concerned, because they had just about worked out how to comply with one set of rules before seeing another set coming down the track, so I will make sure that BIS is doing as she says.

What we said very clearly with regard to Afghanistan is that anyone who is about to go on operations, is on operations or has recently returned from operations would not be subject to compulsory redundancy, and I believe that that should apply in all circumstances where people are effectively involved in conflict for their country.

My right hon. Friend has rightly been commended for the way he has averted a humanitarian catastrophe, but will he say a little more about what will mark the end of this conflict? Ideally we would like to see Gaddafi step down, but is it possible that he could comply with the terms of the no-fly zone and the UN Security Council resolution while remaining in office and keeping the country divided, rather like a new Cyprus?

My hon. Friend asks the extremely difficult and very good question, because it is unclear what will happen next. People did not predict the rush to Benghazi, and nor did they predict the rush back from Benghazi. They did not predict that the rebels would be so effective at knocking the Gaddafi regime out of all those coastal towns, including the key oil installations, so it is difficult to have an absolutely clear picture of what will happen next. I think that what we should hold true to is the very strong UN Security Council resolution that is about a no-fly zone, about protecting civilians and about getting humanitarian aid in. To comply with that, Gaddafi must comply with all the things in the resolution and with what the President of the United States set out in his statement. I see no sign of that happening and, as that is not happening, we are right to go on enforcing the resolution.

I have a dream: I have a dream that one day our country will not be liable for bailing out the eurozone. Will the Prime Minister confirm whether we have contingency funds set aside for any bail-out that goes ahead?

I share my hon. Friend’s dream, but I have not had to stand on his shoulders, nor he on mine, to realise it; we both have our feet firmly planted on the ground. On that ground, we will be out of all the bail-out arrangements by 2013. That was negotiated by us in Europe, and that is a worthwhile thing that we have achieved, but we are stuck with article 122 in the meantime.

It is good that we will not be liable for bail-outs after 2013, but will the Prime Minister build on his diplomatic successes by using the fact that we have a veto over the permanent arrangements as a lever to extract us earlier—and before we are on the hook for Portugal and Spain?

Let me just say again that I do not think we should speculate on other countries’ financial situations; we certainly would not like it if they speculated on ours. The point is that, in return for agreeing to the treaty change that was put forward, we had an opportunity to win some benefits for the UK. We got ourselves out of all future bail-out mechanisms, and we got an assurance that article 122 would not be used again once those operations were in place. I think that that was the right approach for the UK. It was doable, it was negotiable and it was tough work, but we got it, and to say that there was some other option on the table is, if I may say so, not realistic.

Having prevented Gaddafi from doing to his citizens in Benghazi with guns what he did to our citizens in Northern Ireland with cash, has the Prime Minister had time to

reflect on the fact that, in publishing the legal advice, in being clear and honest about the objective and in going to the United Nations, he has done a great deal to restore the faith in his office that was so profoundly damaged after Iraq?

I am grateful for what my hon. Friend says. It is right to have debates in the House and to do so on the basis of a proper Cabinet decision. Let me just say that we have published not the legal advice, but a note based on the legal advice, and we will stick to the convention that the Government are entitled to receive legal advice confidentially, and then to act in the terms of that legal advice. When we are being asked all sorts of questions about what is legal and illegal under a UN Security Council resolution, I think that that is the right approach.

Does my right hon. Friend agree that the biggest economic boost to Europe would be a successful conclusion of the Doha trade round? Was he not entirely right to keep the Council focused on that matter, and will he update us on progress?

The issue is about trade both internally within Europe and externally between Europe and other countries. On the first one, it is about completing the single market, and the point to remember is that the single market does not apply to four-fifths of our economy if it does not apply to services properly. On Doha, it is still extremely hard going, but if the Chinese and the Americans can agree to enlarge what is on offer, there is still a prospect of making progress this year. We really need those two countries, however, to focus on the fact that there is a benefit to both of them if they show the political bravery to re-open things and try to make the deal larger.

I certainly give that assurance. We are still updating daily the number of British citizens in Libya and the numbers who want to leave. There has obviously been an increase, because so many journalists have gone to the country, but we do what we can with partners to try to get those people out who want to get out. Given that the Turks are now helping us with our diplomatic representation in Tripoli, there are avenues to do that, but if the hon. Gentleman has specific cases in mind, I refer him to the Foreign Secretary and his team, whom I know will do everything that they can to help.

I think the simplest way of putting it is this: if we cut the deficit in half in four years, as Labour proposed, that would mean that in

four years’ time our deficit would be about the same size as Portugal’s today. That really brings it home to us that the problem in Britain is that much deeper because the deficit we inherited was that much bigger. That means, as the European Commission and the European Union said:

“Consolidation should be frontloaded in Member States facing very large structural deficits”.

The Prime Minister knows that in the past he has promised the repatriation of laws relating to small businesses and employment and social legislation. He also knows that the Deputy Prime Minister has ruled it out. In the context of these promises from the European Council, which may turn out to be a triumph of hope over experience, as far as we can tell from the past, and with the Commission merely offering a report, would my right hon. Friend be good enough to reaffirm his policy of repatriation so that we can re-grow the British economy and pass the legislation overriding European business laws where necessary for our own national interest and growth?

The point I would make to my hon. Friend is that we had to come together in a coalition Government with a coalition agreement. If we are absolutely honest with ourselves, Europe is not an area where the Liberal Democrats and the Conservatives always agree, if I can put it that way. However, in the coalition agreement we came to a good agreement that we would not pass further powers from Westminster to Brussels, and that we would introduce the referendum lock so that any further transfer would be subject to referendum; and we also have the agreement that Britain is not intending to join the euro. In spite of the fact that we do not always agree on these European issues—and we are grown-up enough to make that point—I think it is a very strong coalition agreement, and one that all colleagues can support.

When my right hon. Friend spoke to the Japanese Prime Minister on Friday, did he receive assurances from him that everything was being done to reopen Japanese factories that provide much-needed components to the British car industry?

I recognise the point that my hon. Friend makes, given his interest in the magnificent Honda plant in Swindon, which I had the great good fortune to visit. Indeed, although I am not allowed to drive it any more, I am the proud owner of a Honda made in Swindon. I know of the problem. I did not discuss it with the Japanese Prime Minister because we were talking about the absolutely urgent requirements for help for the Japanese now, but it will be key for the Japanese economy, and indeed for ours, to make sure that those trade links are opened up again as soon as possible.

Rather than bail-outs, will the Prime Minister consider putting it to the European Council that there is a better alternative, which is to get spending under control and get a really great Finance Minister like we have here?

My hon. Friend is right. Everyone in Europe has the same challenge: how do we get on top of fiscal deficits and what are the decisions that we need to make in terms of spending reductions and other measures? Everyone in Europe is engaged in this, apart from the Labour party.

It is not just tanks and planes that Gaddafi uses against his own people but the poisonous propaganda on Libyan state TV carried on NileSat, which threatens to undermine hopes for future peace in that country. What can be done to ensure that all Libyans, especially those in Tripoli, can access independent media on which to base their understanding of current events?

The hon. Gentleman makes a vitally important point. We want to do everything we can to try to make sure that people can access independent media, which have had a huge impact on these events. But also, frankly, we should take a tougher approach to Libyan state television, which, as far as I can see, is actually working on behalf of the regime that is terrorising and brutalising its own civilians. The hon. Gentleman makes a very good point that we should pursue urgently.

My right hon. Friend is aware of the relatively peaceful progress being made in the Kingdom of Morocco, in sharp contrast to the situation in much of the rest of region. Will he ensure that we give every encouragement to Morocco following the very positive speech by King Mohammed VI which outlined constitutional and judicial reform in his country?

My hon. Friend makes a good point. The last European Council—there have been quite a lot of them—which was specifically about north Africa, the middle east and the events in Libya, mentioned the excellent speech by the king of Morocco specifically. At a time when many countries in the area are trying to reform, we should encourage those who are engaging in dialogue and reform, and not treat all these countries in the same way.

The euro-plus pact, which was endorsed by the European Council and which I am pleased the UK has not joined, referred to a recently proposed directive on corporation tax, which would apply to the UK if it was adopted. Would the Prime Minister be prepared to veto that directive if it interfered with our tax sovereignty?

It is important that we maintain our tax sovereignty. That is one reason why I think it is right to stay out of the euro-plus pact. One of the terms of the euro-plus pact is to look at developing a common corporate tax base. If eurozone countries want to equalise their tax rates, that is a matter for them, but it is a folly in which I do not think we should engage.

I congratulate the Prime Minister on extricating us from the eurozone bail-out mechanism by 2013. Given that Portugal, Spain and Greece are in financial trouble, most people will be concerned about what contingent liabilities we will be exposed to between now and then. What has my right hon. Friend done to assess those potential liabilities?

We have assessed the liabilities. Debates have been held in this House and there is a great deal of information that I can make available to my hon. Friend. The matter is complicated because as well as the article 122 mechanism, which contains a limited amount of headroom, some of which has already been used up in the case of Ireland, another facility has been put in place that does not include the UK, which has considerably more headroom. Above and beyond that, we will have the future mechanism post-2013. If he likes, I can give him the full details on what all those things are and on the relatively limited liability that the UK has under article 122. As I have said, it is a liability that we wish we did not have.

Over the weekend, my wife was saying what a wonderful job the Prime Minister was doing over the EU bail-outs, and that he was turning into a Mrs Thatcher. She wondered if he could use his immense charm and ability to persuade the euro countries not to ask us to participate in any bail-out? Will the Prime Minister satisfy Mrs Bone?

I am fast coming to the view that Mrs Bone is quite literally insatiable. I will—[Laughter.] I will certainly do my best, but there are some things of which it is quite difficult to persuade one’s European colleagues. I take to heart the compliments that Mrs Bone paid in the early part of my hon. Friend’s question.

Will the Prime Minister confirm that France and the other allied countries will take part in military action only through the NATO command structure, and will not prosecute separate campaigns outside that structure?

That is the arrangement that has been put in place. Obviously, it is both NATO’s command and control structure and its machinery that everyone has agreed to use. The point that the French have made—I think that this is important—is that we should ensure that the world knows that this is not just a NATO operation, but that Arab countries are involved and that there is a broader coalition and alliance. Given that we have the NATO machinery, it makes sense to use it. I think that one should make those practical arguments, rather than getting too caught up in the theology.

I welcome the Prime Minister’s emphasis on deregulation and on strengthening the Single European Act. Does he agree that we should apply that logic to the whole of Europe to ensure that our businesses can operate untrammelled across Europe and that investment is able to flourish?

I do agree. As I said, completing the single market can sound rather technical and dull, but when one considers how much our economies are dominated by services—80% on average—and the fact that there are still so many abuses of the single market by services in so many countries, it is clear that there is a real opportunity to enlarge the whole EU economy if we take these steps.

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